For those that run a business the “cost of risk” formula needs to be understood and managed because it directly effects the bottom line.
The formula looks like this:
Cost of Risk = Insurance (transfer risk to an insurance company by paying a premium) + Retention and Deductibles (The business portion of any loss of uninsured loss) + Inside Admin Costs (internal staff the handle safety training, claims handling, etc) + Outside Services ( Loss Control, Outside Experts, Health Coaches, Employee Assistance Plans) + Indirect Costs (Loss of productivity, Loss of Key Salesman resulting in Lost Customers, Absenteeism)
This formula is like gravity… it’s there whether you like it or not. Manage it and you thrive but mismanage it will cause you to fall hard.